I’ve been wanting to write about this eversince I listened to Yaro Starak’s interview with John Jonas and left a comment on his post. But I have been putting it off for the right time, got busy and forgot about it eventually.

This morning, while I was rummaging through my emails in my other account (the one I use for subscriptions), I found an update from John Jonas’ blog which caught my interest. The subject reads: The #1 Problem Outsourcing To The Philippines. If you don’t know who John Jonas is, he’s the guy behind ReplaceMyself, a website that claims to teach you how to outsource your work to the Philippines to be able to live the 4-hour work week. Sounds perfect, right? For the internet marketer/employer, it does sound fantastic, especially when John added that you can get a full-time employee for  as low as $200/month (bargain, isn’t it). But for someone from the Philippines who’s working online and hoping to earn a decent living, this is where it gets ugly.

Another big internet marketer who seems to be singing to the tune of  “pay less, get more job done” is John Reese, with his Outsource Force membership program, which has sold-out not surprisingly. I’m sure there are others out there who are also spreading their “outsourcing wisdom”, getting sign-ups and are earning because of this.

And while all these is happening, Filipino online workers like me are left wondering “Where have all the good online jobs gone?”

The “Hiring Them for $200/month or $2/hour = Giving them a Good Life” Myth

Before I continue, let me say that I have nothing against John Jonas or John Reese or any other internet marketers/business owners who are outsourcing their work for this small amount. What I’m really against and what I would like to correct is the notion that by paying us $200/month or $2/hour, they are making our lives better.

In order to prove this, let us look at the current minimum wage rate in the Philippines. Based on this government website, it’s PhP404.00 for non-agricultural NCR employees (meaning the typical employees). Converting it to US dollar (using XE), a Filipino minimum wage earner is receiving around $9 $9.5/day. Multiply that to regular monthly working days, which is somewhere between 23 to 24 22 days (Saturdays and Sundays excluded), and this will give us $209 a month. The take-home pay, which is less government taxes and other salary deductions, is obviously lower than that.

But you have to remember that this is only for the minimum wage earners. And in the Philippines, this usually means non-skilled laborers. They probably have never heard of working online, and even if they do, they probably don’t have the skills to qualify. Your typical web savvy, computer expert, quick-learner, efficient Virtual Assistant is most likely a skilled worker, a professional even (engineers, programmers, teachers, medical practitioners, etc), a University graduate, and was previously earning more than the average rate. Bottomline, this type of Virtual Assistants are skilled, talented, intelligent, and they know that $200/month or $2/hour is not fair enough for the skills that they can offer.

If they are professionals, then why are they working as online freelancers?

There are many reasons for this. I’ll try to enumerate the most common:

• Some are work-at-home moms who want to work and still be able to take care of their children.
• Some find freedom in working at home or are more comfortable working at flexible hours.
• Some are fed up with office politics, or feel that they are not fairly compensated or recognized in their jobs.
• Some are working at jobs they don’t like and working online gives them the chance to do something they are passionate about.
• Some have offline businesses that are not doing well or have closed down and they are looking for other ways to earn an income.
• Some feel they will find better opportunities online.

And the list goes on.

If they are earning more than the minimum wage, why are they agreeing to the $200/month or $2/hour rate?

Okay, this is not a secret among Filipino online workers, but I’m just not sure if employers are aware of this. When I started looking for online jobs in oDesk, I was advised to ask for a low rate. Why? Because I don’t have an experience yet.

In oDesk, they have this feedback scoring system that allows employers to rate the contractors they hired after the project was finished and vice versa (contractors can also rate employers). Obviously, employers want to hire those with a high feedback score. But some are willing to a take chance (or take advantage, depending on how you look at it) on new oDesk members who don’t have a feedback score yet, but have really low rates. And the only reason these newbies are asking for a cheap pay is because they are new and they want to get a job fast, get a good feedback and build up their scores.

After every couple of jobs (especially when given with a good feedback), most of us will start adjusting our rate by $1-$2 until we get to what we think is fair.

Is $200/month or $2/hour not fair enough?

Working at home has its share of disadvantages. Among these is the absence of regular work benefits such as medical insurance, 13th month pay, and other job-related incentives. Not mention that we also have to pay our bills, or the additional expense that we incur since we started working online. Remember that the Philippines is a tropical “sunny-all-day” country. Some of us need to use an air cooling unit to be able to work conveniently. I am one of those because my heat-triggered migraine makes it impossible for me to work on hot, humid days (which is pretty much everyday for most of the months). Unfortunately, using the air conditioner all day means 20%-30% increase in our electric consumption bills.

We also need to get and pay monthly for a high-speed internet connection (relative to Philippine’s standard of high-speed internet of course) and a suitable computer (this is especially true for freelance graphic artists). And sometimes, we need to purchase additional peripherals like headset, webcam, etc. Or softwares and desktop applications. In other words, we provide all the necessary tools that, in a regular company setup, are usually provided by the employer. You pay us for the work that we do, but we pay for everything else: equipment, benefits, convenience, etc.

To explain how a Filipino online worker can afford to agree to these low-paying jobs, I’m copying a portion of the comment I left at Yaro’s post.

If Jon (sorry, I misspelled his name. It should be John, not Jon) was able to hire employees on a $200-monthly salary for more than a year, then he is a lucky guy. But maybe, what he didn’t know is that his ‘Filipinos’ are accepting other smaller projects outside their jobs because what he’s paying them is just not enough. $200 doesn’t mean a lot here especially if we factor in all the bills that we need to pay. It’s very common for Filipino freelancers to take 2-4 online jobs at a time and spend as much as 16 hours of work in a day in order to earn decently. Still, a lot of us are grateful. I know of one Filipina Virtual Assistant who was so happy because she got a 5th online job. And this is despite the fact that it means less than 4 hours of sleep everyday.

Having said all these, I think you can understand why I will say, despite what others are harping and making money out of, that $200/month or $2/hour is DEFINITELY NOT A FAIR RATE.

The Number One Problem When Outsourcing to the Philippines…

… is NOT what John Jonas said in his blog. To be honest, I don’t get how he came up with his answer. I read down in the comments and there I found not 1, but 3 of the most common problems that employers face when they outsource. And I believe this doesn’t apply only to outsourcing to the Philippines, but outsourcing to other countries with similar low cost of living as well.

• People suddenly dropping out of the job without any notice
• People working on multiple jobs at the same time
• People who don’t seem to know what to do

I am partial to online workers here in the Philippines because I am one of them. But I won’t deny that not all of us are efficient. If you put up a $200/month or $2/hour job post, what you will attract are those who have multiple low-paying jobs, which means that he/she will not be able to devote all his/her time to your project, or beginners who are testing the waters and most probably are not prepared to take on the tasks that you have in mind. There is another group who will take a $200/month or $2/hour job only to see if it the tasks are the easy, copy-paste type of work and will require no skill (because after all, that is approximately the basic pay for those types of jobs here in the Philippines). The moment they feel an imbalance in their work load and their pay, they will be on the hunt again for a better job offer. And expect that they will leave you the moment they find one.

Yes, we tend to stick to a job, but only if we feel that we’re being compensated fairly. You can hire a Filipino to work for you for as low as $1/hour, but you can’t expect him to work on that rate for more than a year. Yes, a long-term job sounds good to us, but a long-term slavery is another thing. We, of course, want to climb up the steps and improve our living condition. We simply cannot subsist on a meager pay out of loyalty to the person who’s giving us a job.

What’s my point here?

I’m not sure where exactly this “outsource to the Philippines and get someone to do everything for you for $1-2 an hour or $200-$400 a month and don’t feel guilty because you are giving them jobs, you are making their lives better” misconception started. And whoever perpetuated this MAY BE distorting some facts or exaggerating a little. Again, like what I said in Yaro’s post.

It doesn’t mean that you’re improving our lives by paying us $200/month. It only means that you’re paying us $200.

But I’m not saying that by paying only $200/month or $2/hour, you are doing us a disservice. You are still giving us jobs and we are grateful for that. But claiming that the $200/month or $2/hour job will enable us to have a well-off lifestyle is a totally different matter.

When clients give me $5, $10, $15,  $20 bonuses, I thank them with all my heart.  But I don’t thank them because they gave me something enough to buy a week’s worth of groceries or enough to afford me a whole day of R&R, because that is not the case. I am thanking them for their generosity–for giving me a bonus, regardless of how much it is.

We’re not culturally loyal, but we’re generally grateful.

Another Filipino may be thanking his employer for his $400/month salary because he used to work at a job that he really hates, and his employer gave him the chance to get out of that job and do something that he really likes. But by thanking his employer, it DOESN’T mean that the $400/month is enough to give him and his family a comfortable lifestyle. In fact, he may be taking other jobs on the side to earn a bit more. What he is grateful for is the fact that his employer opened a door of opportunities for him.

…the beauty of working from home for a freelance programmer (or any other freelancer for that matter) is he can accept the $400/month salary, knowing that he can also take smaller projects on the side because he has more time on his hands.

$400/month for a bachelor is good enough, but if he’s a married guy with a family to feed and take care of, $400 is hardly enough.

There are many Filipino online freelancers who will agree to work for a low rate (and will be grateful too because you’re giving them jobs). But don’t expect them to become super employees who can create business empires for you.

Be reasonable. If you want someone who can function as a data-entry personnel, an SEO assistant, a graphics artist, a web researcher, a writer, someone who create and maintain your blogs, a personal secretary who can make and take calls, schedule appointments, book flights and accommodations, answer emails, etc– don’t you think this person deserves so much more than $2/hour or $200/month, regardless of where he/she is from?

So am I complaining?

Yes and No.

Yes, because just recently, I was looking for a second job and a lot of the employers in oDesk are not willing to pay more than $2 an hour, and yet they have this long list of tasks that the successful applicant is expected to do.  Some are ridiculously low-paying for such extremely tedious tasks, I doubt if they realize that they may never find the person they are looking for.

No, because the real reason why I wrote this post is to make potential employers–business owners who are thinking of outsourcing some work to people like me–understand the truth behind the $200/month full-time employee or the $2/hour super VA myth. You can find one, but you shouldn’t expect this person to work ONLY for you or work for a LONG TIME on this rate. And you really can’t blame them if they don’t.

Again, I have nothing against people like John Jonas or John Reese. They are, after all, doing us good by telling other people to outsource to the Philippines, which helps a lot of people here including myself. But they are big voices in this industry and can definitely influence other people’s perception of what it’s like to outsource to third world countries like the Philippines. They can say, “paying them $200/month or $2/hour is OK” and people will take it as it is.

But I’m telling you, as a Filipino who knows the real deal here, this type of perception is HURTING us. It’s hurting our chances of having a good life–of earning well and still have ENOUGH time to enjoy our earnings. We are NOT asking for a bigger share of the pie. We’re just asking for a FAIR RATE. I don’t think having 2-3 jobs and working 16/hours a day, 6 days a week just to earn above $400/month can give us that. Do you?

Nowadays, the line between outsourcing and slavery is getting thinner and thinner.  And it saddens me because this is my source of income now. Some would argue that freelancers from India or Pakistan or anywhere else, are able to do well, even do a better job, on these rates. It’s good if you can find someone in these countries who’s comfortable with your work and payment terms. But personally, I think the outsourcing industry should be independent of race or country. Some find gems in the Philippines, some find them in India and some find them in their own country.

But my point here is this: Are you paying them a fair rate for the job that you expect them to do? If the $200/month or $2/hour (for a full-time job) that you’re paying allows them to buy enough food to feed their family, pay the bills, enjoy some basic comforts, etc — then that IS fair enough.

Otherwise, you’re probably just one of the many who’s only after the cheap labor and don’t really give a damn about the online workers that you are hiring. And will probably be the first to complain when you’re online worker fall short of your expectations.

P.S. I know of employers who are paying $400/month but are very considerate and reasonable with their tasks, treat us with respect, generous when their budget permits, and help their employees whenever they can. They are good people who are a pleasure to work for. I’ll be willing to work for this kind of employers for a long time and I’ll do my best to help them succeed in their businesses because they deserve it. See, this is not all about rates. But whether or not you’re asking us to do a job for a fair rate.

P.P.S. If you’re saying “What are you whining about? At least we’re giving you jobs that your government cannot provide”, this post is not intended for you.

P.P.P.S. I know a lot of unfair labor practices are happening all over the world. But given the chance to speak and be heard, I’m sure most of the victims will spill out all their grievances. In my case, I have this blog. I have the freedom of speech. This is my podium. And this is what I want to say.

$2/hour, $200/month, average income, John Jonas, John Reese, minimum wage, outsourcing, outsourcing to the Philippines, Yaro Starak Insights